Rates, Thresholds and Amounts for 2012 Source Deductions and Contributions

Below are the rates, thresholds and amounts applicable for 2012 source deductions and contributions.

Indexation for 2012

Every year, the personal income tax system is automatically indexed. The indexation factor for 2012 is 2.66%.

Income thresholds and income tax brackets

For 2012, the income tax rates applicable to the three income tax brackets remain at 16%, 20% and 24% and the thresholds for the three income tax brackets have been indexed as follows:

The 16% rate applies to taxable income of $40,100 or less. (The threshold was previously $39,060.)

The 20% rate applies to taxable income of more than $40,100 but not more than $80,200. (The threshold was previously $78,120.)

The 24% rate applies to taxable income of more than $80,200.

Source deductions return (form TP-1015.3-V)

The Source Deductions Return (form TP-1015.3-V) has been amended to take into account the new tax credit for workers 65 or older. In addition, the amounts on form TP-1015.3-V have been indexed.

Amount for workers 65 or older

A new tax credit for workers 65 or older will gradually be introduced beginning January 1, 2012. This new tax credit is designed to eliminate the income tax that such workers would normally have to pay on a portion of their eligible work income that is in excess of $5,000. The primary work income targeted by the measure is employment income.
If an employee 65 or older expects to earn more than $5,000 in eligible work income during the year, he or she may ask you to reduce applicable source deductions by completing form TP-1015.3-V.

If you use Table TP-1015.TI-V

If you use Table TP-1015.TI-V to calculate source deductions, you are not required to make any adjustments since the amount of this tax credit is included in the amounts used to establish the deduction codes in Table TP-1015.TI-V. As of 2012, these codes will take into account the tax credit for workers 65 or older.

If you use the formulas

If you calculate source deductions using the formulas in the guide Formulas to Calculate Source Deductions and Contributions(TP-1015.F-V), changes have been made to take the new tax credit into account. For more information on the changes, see Part 2 of the guide.

Indexation of the amounts in form TP-1015.3-V

Amounts for calculating income tax withholdings

2012

2011

Basic amount

$10,925

$10,640

Amount transferred from one spouse to the other

$10,925

$10,640

Amount for other dependents who are 18 or over

$2,930

$2,855

Amount for a child under 18 enrolled in post-secondary studies

$2,015

$1,965

Additional amount for a person living alone (single-parent family)

$1,585

$1,545

Amount for a severe and prolonged impairment in mental or physical functions

$2,485

$2,420

Amount for a person living alone

$1,280

$1,245

Age amount

$2,350

$2,290

Amount for retirement income

$2,090

$2,035

Reduction threshold used to calculate net family income (This income is used to calculate the age amount, the amount for a person living alone and the amount for retirement income.)

$31,695

$30,875

Bonuses and retroactive pay

The threshold that determines the method to be used to calculate the income tax withholding from bonuses and retroactive pay has been increased from $13,300 to $13,700 for 2012.

Maximum deduction for employment income

The maximum deduction for employment income has been increased from $1,045 to $1,075 for 2012.

If you are using Table TP-1015.TI-V

The table takes into account the increase in the deduction in calculating the remuneration subject to source deductions of income tax.

If you are using the formulas

If you are using the formulas in the guide Formulas to Calculate Source Deductions and Contributions(TP-1015.F-V) to calculate source deductions, changes have been made to take into account the increase in the maximum deduction for employment income.

Amount paid to an emergency services volunteer

The tax-exempt amount of financial compensation paid to an emergency services volunteer has been increased from $1,045 to $1,075 for 2012.

Maximum pensionable earnings and contribution rate (QPP)

The QPP contribution rate has been increased from 9.9% to 10.05% for 2012, which corresponds to a contribution rate of 5.025% for the employee and 5.025% for the employer. In addition, the maximum pensionable earnings for the purposes of the QPP have been increased from $48,300 to $50,100. The maximum annual contribution to be withheld for any employee has therefore been increased from $2,217.60 to $2,341.65.

Maximum insurable earnings and premium rate (QPIP)

The maximum insurable earnings subject to QPIP premiums have been increased from $64,000 to $66,000 for 2012. Also, the employee premium rate has been increased from 0.537% to 0.559%, and the employer premium rate has been increased from 0.752% to 0.782%. As a result, the maximum employee premium is $368.94 (instead of $343.68) and that of the employer is $516.12 (instead of $481.28).

Maximum remuneration subject to the contribution to the financing of the CNT

The portion of the remuneration that exceeded $66,000 (instead of $64,000) is not subject to the contribution to the financing of the CNT for 2012.